Marsh launches of a insurance and reinsurance facility for green energy projects

Marsh announced the launch of a first-of-its-kind insurance and reinsurance facility that provides dedicated insurance capacity for new and existing green and blue hydrogen energy projects.

Developed by Marsh in collaboration with insurers Liberty Specialty Markets, part of Liberty Mutual Insurance Group, and AIG, the facility provides up to $300 million of coverage per risk for the construction and start up phases of hydrogen projects globally.

Investment in green and blue hydrogen initiatives is estimated to exceed $150 billion by 2025 as traditional energy operators, governments, and hard-to-abate industries race to meet their carbon reduction obligations.

Operators have found it particularly challenging to secure adequate insurance market provision for these new and emerging technologies.

Marsh’s facility is backed by a panel of A-rated global insurers, led by Liberty Specialty Markets and AIG. It provides capacity up to US$300 million per risk and is structured flexibly to enable clients – from small operators to multinational organizations – to choose coverage for the construction or startup phase, or a combined risks policy that extends to first year operations.

As well as providing risk transfer options for all construction and operational phase property damage risks, the facility includes marine cargo, business interruption, general third party liability, and contingent delay-in-start up insurance.

Marsh’s facility is an important development for the insurance industry that will help enable the acceleration of the global energy transition to renewables. These sources of green energy include solar energy, wind energy, geothermal energy, and hydroelectric power.

As the global hydrogen industry, especially green hydrogen, scales up rapidly to meet demand the facility will reduce the complexity of securing risk transfer options for operators of all sizes and boosts investor and lender confidence in achieving their ambitious project timeframes

Andrew George, Global Head, Energy & Power, Marsh Specialty

“We are delighted to collaborate with Marsh to bring this solution to market. This is another example of how Liberty is providing industry-leading technical expertise to assess, quantify and underwrite emerging technology risks. Our ambition is to be the strategic insurance partner for clients engaged in the energy transition.” – Lesley Harding, Global Head of Energy at Liberty Specialty Markets.

Renewable energy in the future is predicted that by 2024, solar capacity in the world will grow by 600 gigawatts (GW), almost double the installed total electricity capacity of Japan. Overall, renewable electricity is predicted to grow by 1 200 GW by 2024, the equivalent of the total electricity capacity of the US.

“At AIG we are keen to elevate the industry standard, so we proactively collaborate with our partners to devise new and impactful insurance solutions in support of our clients’ changing needs. This innovative solution is one of many initiatives that we are working on with our clients and broker partners in support of the energy transition and our net zero commitments.” – James Langdon, AIG UK Head of Energy and Construction.

Blue hydrogen applies carbon capture technology to a natural-gas-based process, while green hydrogen relies on zero-emissions electricity to run an electrolyzer that splits water molecules into hydrogen and oxygen.

It is worth pointing out that only four blue hydrogen projects are currently in operation worldwide, all with very low carbon capture rates, with the highest being the 43% at Shell’s Quest facility in Alberta, Canada, and the lowest being the 29% at ammonia producer Nutrien’s plant in the same province.

by Nataly Kramer